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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Blueprint for an IPO

Companies go public to raise capital to fuel growth, pay down debt and provide liquidity to shareholders. Although all issuers and offerings are different, the basic process of going public remains relatively constant. Blueprint for an IPO identifies the key players, details the process and identifies the obligations companies will face after going public.

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Chris Lazarini Discusses Heightened Pleading Standard Under Rule 9(b)

Securities Litigation Commentator

Publications

March 14, 2017

Bass, Berry & Sims attorney Chris Lazarini discussed the heightened pleading standard for claims of fraud under Rule 9(b) in an auction rate securities case. 

Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

William Beaumont Hospital System vs. Morgan Stanley & Co., LLC, No. 16-1135 (6th Cir., 1/26/17) 

Under Rule 9(b)'s heightened pleading standard, claims of fraud must state with particularity: (1) the statements Plaintiff contends were fraudulent, (2) the identity of the speaker, (3) where and when the statements were made, and (4) an explanation of why the statements were fraudulent. 

In 2006, the parties entered into bond purchase agreements and an interest rate swap agreement for Plaintiff's auction rate securities ("ARS") issuance, which Defendants would underwrite and auction. In late 2007, the ARS market collapsed. Defendants initially submitted covering bids to support Plaintiff's ARS sales, but stopped doing so in early 2008. To avoid a failed auction, Plaintiff was forced to pay investors interest rates higher than anticipated. In 2014, Plaintiff sued, alleging that Defendants omitted material information about the ARS market, their cover bidding process and the availability of different interest rate structures, and failed to warn Plaintiff about the deteriorating ARS market in 2007 and 2008. The district court dismissed, finding Michigan's six-year statute of limitations on Plaintiff's common law fraud claims had run, and Plaintiff failed to state a claim for relief under FRCP 12(b)(6) (see SLA 2016-06).

Conducting a de novo review, the Sixth Circuit affirms the 12(b)(6) dismissal, because Plaintiff failed to meet FRCP 9(b)’s heightened pleading standards. First, the Court rejects Plaintiff's claim that Defendants failed to disclose their ability to stop making cover bids, pointing out that Plaintiff acknowledged Defendants' right to do so in its 2006 ARS Official Statement. Second, the Court finds Plaintiff's allegations regarding alternative interest rate structures too vague because Plaintiff failed to describe the time, place, speaker and content of the alleged fraud. Plaintiff's failure to warn claims, the Court concludes, fail for the same reason and because the volatility in the ARS market was "widely-known" in the financial markets. Finally, Defendants had no duty to provide ongoing disclosures about the ARS market, and without that duty, there can be no fraud by omission. Because the Court affirms on 12(b)(6) grounds, it declines to address the statute of limitations issues. 

Goldman Sachs was also a Defendant.


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